GFC 2.0 requires a defensive portfolio - Fidelity

In 2012, a conservative asset allocation is the best defence against a so-called 'second round' of the global financial crisis.

That's according to Fidelity Worldwide Investment director of asset allocation Trevor Greetham, who believes the current financial crisis is based on uncertainty surrounding the value of Eurozone sovereign debt.

Despite this, Greetham believes that a bullish case can be made for 2012.

"It rests on a US-led economic upswing strong enough to offset anticipated weakness in the European economy, and it assumes the worst-case scenario of a messy euro break-up can be avoided," he said.

He added that the slowdown in global growth and a peak in inflation will also enable central banks to ease sovereign policy with force.

At the moment though, Greetham argues policy responses are deepening the crisis in European and US markets, and because of this he favours bonds over equities in the new year.

"Within global equity markets, we favour the US; the market has relatively defensive attributes, and despite the fiscal deadlock, it is still the most likely to stimulate its economy to protect economic growth and jobs," he said.

"Diversification across a range of asset classes will remain an attractive proposition, and there will be lots of opportunities to add value through a sensible tactical asset allocation policy."